Real estate firms are optimistic about the industry's future growth, despite challenges like competition from non-traditional market participants and virtual firms, according to the National Association of Realtors' (NAR's) 2019 Profile of Real Estate Firms.
The report, which is based on a survey of NAR's Brokers of Record membership, looked at the demographics, composition, and characteristics of real estate firms from the perspective of executives and managers. The report noted that 57 percent of the firms surveyed expected their profitability from all real estate activities to increase in the next year. However, they also saw competition increasing during this period.
While 44 percent of firms expected competition from virtual firms to increase next year, 43 percent believed that most of the competition would come from non-traditional market participants. Keeping up with technology and housing affordability were among the other challenges that real estate firms saw over the next two years.
"It is clear that the real estate industry is rapidly changing, and with that comes growing competition in the market," said Bob Goldberg, CEO, NAR. "NAR continues to stay ahead of the evolving trends in technology as we work with market disruptors to best serve our members and ensure they have the resources needed to be successful."
Looking at affordability concerns specifically, 58 percent of firms were concerned with millennials' ability to buy a home, 46 percent with millennials' view of homeownership, and 26 percent with Baby Boomers retiring as real estate professionals.
"Real estate firms continue to look optimistically toward the future, with a majority expecting profits to increase in the next two years," said John Smaby, President, NAR. "These trends are positive signs, particularly in our constantly evolving industry."
The report noted that over 80 percent of real estate firms had a single office, typically with two full-time real estate licensees, down from three licensees indicated in the previous report in 2017. Firms with only one office had a median brokerage sales volume of $4.2 million in 2018 (down from $4.3 million in 2016), while firms with four or more offices had a median brokerage sales volume of $100 million in 2018 (down from $235.0 million in 2016).
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